Attached files
| file | filename |
|---|---|
| 8-K - AMERICAN DEFENSE SYSTEMS INC | v181632_8k.htm |
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Company
Contacts:
|
Investor
Relations:
|
|
Roger
Ward
|
Ron
Both
|
|
V.P.
of Marketing & Investor Relations
|
Managing
Director
|
|
American
Defense Systems, Inc.
|
Liolios
Group, Inc.
|
|
Tel
516-390-5300, x326
|
Tel
949-574-3860
|
|
rward@adsiarmor.com
|
info@liolios.com
|
American
Defense Systems Reports Fiscal 2009 Results
2009
Revenues Increased 29% to Record $45.9 Million; Physical Security Product
Business up 125% to $4.5 Million in 2009
HICKSVILLE, N.Y., April 19,
2010 — American Defense Systems, Inc.
(ADSI) (AMEX: EAG), a provider of advanced transparent and opaque armor,
architectural hardening and security products for Defense and Homeland Security,
reported financial results for the year ended December 31, 2009.
2009
Financial Results
Revenues
from continuing operations in 2009 increased 29% to a record $45.9 million from
$35.6 million in 2008. The increase in revenue in 2009 was primarily due to
increased order fulfillment under a large military contract, including the
acceptance of certain orders that were delayed from the fourth quarter of 2008
into the first and second quarters of 2009. The improvement was also due to
improvement in the physical security product business of the company’s
subsidiary, American Physical Security Group, LLC (“APSG”), which increased 125%
to $4.5 million from $2.0 million in 2008.
Gross
margin as a percentage of revenue in 2009 was 26% as compared to 31% in 2008.
The decrease in gross margin for the year was due primarily to sales under the
military contract mentioned above that contributed lower gross margins as well
as an aggressive sales program with OEM vendors of armor solutions. Gross
margins are expected to return to historically higher ranges in 2010, starting
in the first quarter.
Loss from
continuing operations in 2009 totaled $15.7 million or $(0.37) per share versus
a loss of $2.4 million or $(0.06) per share in the same period a
year-ago.
Net loss
in 2009 totaled $16.3 million or $(0.38) per share, compared to a net loss of
$4.5 million or $(0.11) per share in the same year-ago period.
Adjusted
EBITDA loss for 2009 was $6.1 million or $(0.14) per basic and diluted share
versus an adjusted EBITDA loss of $4.9 million or $(0.12) per basic and diluted
share in 2008 (see the definition and important discussion about the
presentation of adjusted EBITDA, a non-GAAP term, below).
Fourth
Quarter 2009 Operational Highlights
ADSI
advanced operationally in a number of areas during the fourth quarter of 2009,
including:
|
·
|
Received
the recommendation by the National Tactical Officers Association (NTOA)
and its highest ratings for ADSI’s portable transparent ballistic shield.
The ratings are based upon design, quality and durability. The NTOA
member-tested and recommendation program is designed as a service to
assist the association's membership in selecting the best products
available to the tactical
community.
|
|
·
|
Introduced
a new portable transparent protective shield called “COBRA,” for
Collapsible Optic Bullet Resistant Armor. The COBRA is designed primarily
for the purpose of VIP protection with its ability to easily roll through
standard doorways and onto elevators. The design provides broader coverage
than ADSI's Portable Transparent Ballistic Shield ("PTBS"), while being
more portable than the PTBS due to its collapsible capability. This new
shield also presents a more affordable alternative for security at
commercial and government buildings that cannot justify the cost of
hardening the entire facade of the structure, while providing effective
protection against a specific threat
level.
|
Management
Commentary
“The
record revenues we achieved in 2009 demonstrated the strength of our business,
the quality of our products, and our expanding relationships with our
customers,” said Anthony J. Piscitelli, chairman and CEO of American Defense
Systems. “However, in 2009 we also invested heavily in bringing a new product to
market with Caterpillar and completed the extensive expense reduction program we
announced in December that we believe will result in more than $4 million in
annualized savings. We also incurred substantial costs due to regulatory
compliance activity and other professional fees related to our obligation to
redeem our Series A Convertible Preferred Stock.”
“Now as a
result of both a better operational structure and a higher margin product mix,
along with a top line that exceeded our earlier expectations,” continued
Piscitelli, “we expect to report a positive net income from operations for first
quarter of 2010. One important factor driving our growth is the continued
expansion of our physical security unit, APSG, which more than doubled its sales
in 2009 and is effectively diversifying our sales mix beyond our traditional
military business. APSG, which received two key certifications from the U.S.
Department of Homeland Security in 2009, has recently delivered products to one
of the nation’s largest international airports and a major federal government
institution.”
Fergal
Foley, ADSI’s chief operating officer, commented: “The success of our physical
security business has also provided the economies of scale to bring the
manufacturing of our protective glass products in-house, and we’ve recently
leased a 72,000 square foot manufacturing facility located just north of Fort
Bragg and Fayetteville, North Carolina. In addition to producing APSG physical
security products and housing our APSG offices, this facility will also be able
to produce the specialized glass used in our transparent armor solutions for
military construction vehicles. Operation of this facility is therefore expected
to eventually improve our gross margins company-wide along with other
operational benefits.
“From our
extensive efforts in 2009 to establish a better footing for ADSI in an expanding
global market for both government and commercial physical security and
protection, we expect positive results to continue through the remainder of 2010
and beyond.”
Guidance
The
company expects to report first quarter 2010 revenue of approximately $14
million, as compared to guidance of $12 million issued in December, and report
income from operations between $0.01 and $0.03 per share. Management plans to
provide second quarter guidance in its upcoming first quarter 2010 press release
and conference call.
Conference
Call and Webcast
The
company will hold a conference call to discuss its fiscal 2009 results on
Tuesday, April 20, 2010. Members of ADSI’s executive management team will host
the presentation, followed by a question and answer period.
Date:
Tuesday, April 20, 2010
Time:
4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Dial-In
Number: 1-800-895-0231
International:
1-785-424-1054
Conference
ID#: 7DEFENSE
The
conference call will be broadcast simultaneously and available for replay via
the investor section of the company’s Web site at
www.adsiarmor.com.
Please
call the conference telephone number 5-10 minutes prior to the start time. An
operator will register your name and organization and ask you to wait until the
call begins. If you have any difficulty connecting with the conference call,
please contact the Liolios Group at 1-949-574-3860.
A replay
of the call will be available after 7:30 p.m. Eastern time on the same day and
until May 20, 2010:
Toll-free
replay number: 1-800-723-0488
International
replay number: 1-402-220-2651
(No
passcode required)
Use
of Non-GAAP Financial Information
Adjusted
EBITDA is not a financial measure calculated and presented in accordance with
U.S. generally accepted accounting principles (“GAAP”) and should not be
considered as an alternative to net income, operating income or any other
financial measures so calculated and presented, nor as an alternative to cash
flow from operating activities as a measure of the company’s liquidity. ADSI
defines adjusted EBITDA as net income/(loss) before interest (net); taxes;
depreciation; unrealized (gain) loss on adjustment of fair value of its series a
convertible preferred stock classified as a liability, income tax expense
(benefit), loss (gain) on disposal of discontinued division, loss on deemed
extinguishment of debt, finance charge and unrealized (gain) loss on investor
warrant liability. Other companies (including the company’s competitors) may
define adjusted EBITDA differently. The company presents adjusted EBITDA because
it believes it to be an important supplemental measure of performance that is
commonly used by securities analysts, investors and other interested parties in
the evaluation of companies in a similar industry. Management also uses this
information internally for forecasting and budgeting. It may not be indicative
of the historical operating results of ADSI nor is it intended to be predictive
of potential future results. Investors should not consider adjusted EBITDA in
isolation or as a substitute for analysis of results as reported under GAAP. See
“Reconciliation of GAAP (Loss) to adjusted EBITDA (Loss)” below for further
information on this non-GAAP measure and reconciliation of adjusted EBITDA to
GAAP net loss for the periods indicated.
|
American
Defense Systems, Inc.
|
||||||||
|
Reconciliation
of GAAP Loss to Adjusted EBITDA Loss
|
||||||||
|
(in
thousands, except per share amounts)
|
||||||||
|
(unaudited)
|
||||||||
|
Dec
31,
|
Dec
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
GAAP
net income (loss)
|
$ | (16,290 | ) | $ | (4,506 | ) | ||
|
Reconciling
items from GAAP to Adjusted EBITDA loss
|
||||||||
|
Interest
expense, net
|
4,669 | 2,186 | ||||||
|
Depreciation
|
1,085 | 843 | ||||||
|
Unrealized
(gain) loss on adjustment of fair value
|
||||||||
|
Series
A convertible preferred stock classified
|
||||||||
|
as
a liability
|
326 | (2,901 | ) | |||||
|
Income
tax expense (benefit)
|
753 | (996 | ) | |||||
|
Loss
(gain) on disposal of discontinued division
|
575 | 1,916 | ||||||
|
Loss
on deemed extinguishment of debt
|
2,614 | - | ||||||
|
Finance
charge
|
210 | 23 | ||||||
|
Unrealized
(gain) on investor warrant liability
|
(36 | ) | (1,450 | ) | ||||
|
Adjusted
EBITDA (loss)
|
$ | (6,094 | ) | $ | (4,886 | ) | ||
|
Adjusted
EBITDA (loss) per common share:
|
||||||||
|
Basic
and diluted
|
$ | (0.14 | ) | $ | (0.12 | ) | ||
|
Weighted
average common shares outstanding:
|
||||||||
|
Basic
and diluted
|
43,192 | 39,416 | ||||||
About
American Defense Systems, Inc.
American
Defense Systems, Inc. (“ADSI”) offers advanced solutions in the design,
fabrication, and installation of transparent and opaque armor, security doors,
windows and curtain wall systems for use by military, law enforcement, homeland
defense and corporate customers. ADSI engineers also specialize in developing
innovative, functional and aesthetically pleasing security applications for the
mobile and fixed infrastructure physical security industry. For more
information, visit the ADSI corporate Web site at
www.adsiarmor.com.
Some
of the statements made by American Defense Systems, Inc. (“ADSI”) in this press
release, including, without limitation, statements regarding ADSI’s anticipated
future growth, are forward-looking in nature. ADSI intends that any
forward-looking statements shall be covered by the safe harbor provisions for
such statements contained in the Private Securities Litigation Reform Act of
1995. Statements that are predictive in nature, that depend upon or refer to
future events or conditions, or that include words such as “may,” “will,”
“should,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,”
“predicts,” “potential,” “continues,” “projects” and similar expressions are
forward-looking statements. ADSI cautions you that forward-looking statements
are not guarantees of performance. ADSI undertakes no obligation and disclaims
any obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise. Forward-looking
statements involve known and unknown risks and uncertainties that may cause
ADSI’s actual future results to differ materially from those projected or
contemplated in the forward-looking statements. ADSI believes that these risks
include, but are not limited to: ADSI’s reliance on the U.S. government for a
substantial amount of its sales and growth; decreases in U.S. government defense
spending; ADSI’s ability to contract further with the U.S. Department of
Defense; ADSI’s ability to comply with complex procurement laws and regulations;
competition and other risks associated with the U.S. government bidding process;
changes in the U.S. government’s procurement practices; ADSI’s ability to obtain
and maintain required security clearances; ADSI’s ability to realize the full
amount of revenues reflected in its backlog; ADSI’s ability to finance the
redemption of ADSI’s series A convertible preferred stock in accordance with the
terms of such stock; ADSI’s reliance on certain suppliers; and intense
competition and other risks associated with the defense industry in general and
the security-related defense sector in particular.
Additional
information concerning these and other important risk factors can be found under
the heading “Risk Factors” in ADSI’s filings with the Securities and Exchange
Commission, including, without limitation, its most recent annual report on Form
10-K. Statements in this press release should be evaluated in light of these
important factors.
American
Defense Systems, Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(unaudited)
|
As
of December 31,
|
||||||||
|
ASSETS
|
2009
|
2008
|
||||||
|
CURRENT ASSETS
|
||||||||
|
Cash
|
$ | - | $ | 374,457 | ||||
|
Accounts
receivable, net of allowance for doubtful accounts of $222,448 and $0 as
of December 31, 2009 and 2008, respectively
|
2,288,666 | 4,981,150 | ||||||
|
Accounts
receivable-factoring
|
199,876 | - | ||||||
|
Tax
receivable
|
108,741 | |||||||
|
Inventory
|
1,352,873 | 621,048 | ||||||
|
Prepaid
expenses and other current assets
|
540,381 | 2,088,801 | ||||||
|
Costs
in excess of billings on uncompleted contracts
|
6,409,963 | 7,143,089 | ||||||
|
Deferred
Tax Assets
|
521 | - | ||||||
|
Deposits
|
407,137 | 437,496 | ||||||
|
Assets
of discontinued operations
|
- | 736,613 | ||||||
|
TOTAL
CURRENT ASSETS
|
11,308,158 | 16,382,654 | ||||||
|
Property
and equipment, net
|
3,078,724 | 3,743,936 | ||||||
|
Deferred
Financing Costs, net
|
1,547,551 | 1,500,533 | ||||||
|
Notes
Receivable, net
|
400,000 | 925,000 | ||||||
|
Intangible
Assets
|
606,000 | 606,000 | ||||||
|
Goodwill
|
450,000 | 450,000 | ||||||
|
Deferred
Tax Asset
|
- | 1,167,832 | ||||||
|
Other
Assets
|
138,001 | 159,560 | ||||||
|
TOTAL
ASSETS
|
$ | 17,528,434 | $ | 24,935,515 | ||||
|
LIABILITIES
AND SHAREHOLDERS' (DEFICIENCY) EQUITY
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Accounts
payable
|
$ | 6,744,285 | $ | 2,480,652 | ||||
|
Accrued
expenses
|
498,795 | 755,615 | ||||||
|
Line
of Credit
|
- | 76,832 | ||||||
|
Warrant
liability
|
35,413 | 90,409 | ||||||
|
Mandatory
redeemable Series A Convertible Preferred Stock (cumulative), 15,000
shares authorized issued and outstanding
|
- | 10,981,577 | ||||||
|
Liabilities
of discontinued operations
|
- | 736,613 | ||||||
|
TOTAL
CURRENT LIABILITIES
|
7,278,493 | 15,121,698 | ||||||
|
LONG TERM LIABILITIES
|
||||||||
|
Mandatory
redeemable Series A Convertible Preferred Stock (cumulative), 15,000
shares authorized issued and outstanding
|
12,429,832 | - | ||||||
|
Deferred
Tax Liability
|
521 | - | ||||||
|
TOTAL
LIABILITIES
|
19,708,846 | 15,121,698 | ||||||
|
COMMITMENTS
AND CONTINGENCIES - Note 6
|
||||||||
|
SHAREHOLDERS' (DEFICIENCY)
EQUITY
|
||||||||
|
Common
stock, $0.001 par value, 100,000,000 shares authorized, 46,611,457 and
39,585,960 shares issued and outstanding as of December 31, 2009 and 2008,
respectively
|
46,611 | 39,586 | ||||||
|
Additional
paid-in capital
|
14,712,414 | 11,096,031 | ||||||
|
Accumulated
Deficit
|
(16,939,437 | ) | (1,321,800 | ) | ||||
|
TOTAL
SHAREHOLDERS' (DEFICIENCY) EQUITY
|
(2,180,412 | ) | 9,813,817 | |||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY) EQUITY
|
$ | 17,528,434 | $ | 24,935,515 | ||||
American
Defense Systems, Inc. and Subsidiaries
Condensed
Consolidated Statement of Operations
(unaudited)
|
Year
Ended December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
CONTRACT
REVENUES EARNED
|
$
|
45,893,979
|
$
|
35,588,849
|
||||
|
COST
OF REVENUES EARNED
|
33,929,327
|
24,702,714
|
||||||
|
GROSS
PROFIT
|
11,964,652
|
10,886,135
|
||||||
|
OPERATING
EXPENSES
|
||||||||
|
General
and administrative expenses
|
7,519,114
|
5,661,781
|
||||||
|
General
and administrative salaries
|
4,144,666
|
4,758,968
|
||||||
|
Sales
and marketing
|
2,661,636
|
2,722,224
|
||||||
|
T2
expenses
|
531,506
|
-
|
||||||
|
Research
and development
|
412,285
|
788,100
|
||||||
|
Settlement
of litigation
|
63,441
|
57,377
|
||||||
|
Depreciation
and amortization
|
1,085,331
|
842,532
|
||||||
|
Professional
fees
|
2,734,816
|
1,561,415
|
||||||
|
TOTAL OPERATING EXPENSES
|
19,152,795
|
16,392,397
|
||||||
|
OPERATING
LOSS
|
(7,188,143
|
)
|
(5,506,262
|
)
|
||||
|
OTHER
INCOME (EXPENSE)
|
||||||||
|
Unrealized
(loss) gain on adjustment of fair value
|
||||||||
|
Series
A convertible preferred stock classified as a liability
|
(325,837
|
)
|
2,900,799
|
|||||
|
Unrealized
gain on warrant liability
|
35,673
|
1,450,117
|
||||||
|
Loss
on deemed extinguishment of debt
|
(2,613,630
|
)
|
-
|
|||||
|
Other
income
|
8,869
|
8,551
|
||||||
|
Interest
expense
|
(3,019,079
|
)
|
(1,222,205
|
)
|
||||
|
Interest
expense - Mandatory redeemable preferred stock dividends
|
(1,650,000
|
)
|
(1,081,081
|
)
|
||||
|
Interest
income
|
-
|
117,312
|
||||||
|
Finance
charge
|
(209,698
|
)
|
(22,598
|
)
|
||||
|
TOTAL
OTHER INCOME (EXPENSE)
|
(7,773,702
|
)
|
2,150,895
|
|||||
|
LOSS
BEFORE INCOME TAXES FROM CONTINUING OPERATIONS
|
(14,961,845
|
)
|
(3,355,367
|
)
|
||||
|
INCOME
TAX EXPENSE (BENEFIT)
|
752,971
|
(996,000
|
)
|
|||||
|
LOSS
FROM CONTINUING OPERATIONS
|
(15,714,816
|
)
|
(2,359,367
|
)
|
||||
|
LOSS
FROM DISCONTINUED OPERATIONS, NET OF TAX:
|
||||||||
|
Loss
from operations of discontinued division
|
-
|
(230,834
|
)
|
|||||
|
Loss
from disposal of discontinued division
|
(575,000
|
)
|
(1,915,903
|
)
|
||||
|
(575,000
|
)
|
(2,146,737
|
)
|
|||||
|
NET
LOSS
|
(16,289,816
|
)
|
(4,506,104
|
)
|
||||
|
Weighted
Average Shares Outstanding (Basic and Diluted)
|
43,192,175
|
39,416,278
|
||||||
|
Loss
per Share - Basic and Diluted:
|
||||||||
|
LOSS
FROM CONTINUING OPERATIONS
|
$
|
(0.37
|
)
|
$
|
(0.06
|
)
|
||
|
LOSS
FROM DISCONTINUED OPERATIONS
|
$
|
(0.01
|
)
|
$
|
(0.05
|
)
|
||
|
NET
LOSS
|
$
|
(0.38
|
)
|
$
|
(0.11
|
)
|
||